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Economy in Brief

U.S. Construction Spending Unexpectedly Dips in May After Seven Straight Monthly Rises
by Winnie Tapasanun  July 1, 2022

• Total construction declines for the first time since September; Apr. and Mar. revised up.

• Residential private construction rises for the 24th straight month, led by home improvement building.

• Nonresidential private construction declines for the third consecutive month.

• Public sector construction falls for the second successive month.

The value of construction put-in-place ticked down 0.1% m/m (+9.7% y/y) in May after upwardly revised rises of 0.8% in April (+0.2% initially) and 0.9% in March (+0.3% previously), according to the U.S. Census Bureau. The May m/m reading was the first monthly decline since September. A 0.5% May increase had been expected in the Action Economics Forecast Survey. The source released the standard annual revisions today.

Private construction was virtually unchanged (+13.2% y/y) in May on top of an upwardly revised 1.1% April increase and six straight m/m advances. Residential private construction grew 0.2% (19.0% y/y) after a 1.7% rise, registering the 24th straight m/m gain. Home improvement building rose 0.6% (34.2% y/y), the 10th successive m/m rise, after a 2.2% increase. Single-family building held steady (+15.1% y/y) following a 1.7% April rise and five consecutive monthly increases. Multi-family building dipped 0.03% (-3.6% y/y) vs. a 0.1% uptick.

Nonresidential private construction fell 0.4% (+3.7% y/y) in May, the third straight m/m fall, after a 0.1% downtick in April. Heath care private construction slid 2.4% (+4.0% y/y), the second consecutive m/m slide. Amusement & recreation private construction dropped 1.5% (+3.8% y/y) vs. a 3.0% rebound. Utilities private construction fell 1.1% (-8.4% y/y), the third successive m/m fall. Commercial building declined 0.9% (+10.9% y/y), the fourth m/m fall in five months. Educational private construction fell back 0.9% (+18.0% y/y), the deepest m/m fall since January. Lodging construction declined 0.3% (-9.8% y/y) vs. a 1.5% rebound. Office building held steady (-3.3% y/y) following a 0.8% rise. To the upside, religious construction rebounded 7.7% (-6.4% y/y) vs. a 11.0% drop. Manufacturing construction grew 1.2% (26.1% y/y), the fourth m/m gain in five months. Transportation building rose 1.0% (-4.6% y/y) following a 1.0% April rise and three consecutive m/m declines. Communication private construction increased 0.2% (-6.1% y/y) vs. five straight m/m drops.

The value of public construction fell 0.8% (-2.7% y/y) in May after a 0.3% decline in April, with residential public construction down 0.7% (-2.7% y/y) and nonresidential public construction down 0.3% (-2.7% y/y). Conservation & development public construction slid 7.3% (+12.0% y/y), the deepest m/m slide since September. Spending on highways & streets, which makes up 28.5% of public construction spending, fell 2.3% (-6.2% y/y) vs. a 0.2% increase. Amusement & recreation public construction decreased 1.4% (-3.5% y/y), reversing a 0.7% April rise. Utilities public construction dropped 0.8% (+40.8% y/y) following four straight monthly gains. Educational public construction fell 0.4% (-6.9% y/y), the third consecutive m/m fall. Water supply construction declined 0.3% (-0.3% y/y) vs. four successive m/m rises. Commercial public construction ticked down 0.1% (-15.0% y/y), the second straight m/m decline. Sewage & waste disposal construction dipped 0.1% (+7.0% y/y), the second consecutive monthly easing. In contrast, public safety construction rebounded 1.5% (-10.0% y/y), the fourth m/m gain in five months. Office public construction rose 0.9% (5.1% y/y) following two successive m/m decreases. Health care public construction was up 0.7% (9.8% y/y) after virtually unchanged.

The construction spending figures, some of which date back to 1946, can be found in Haver's USECON database. The expectations reading is in the AS1REPNA database.

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